Amazon aims at new market

Reports that Amazon is launching its own line of grocery stores raised eyebrows about how their debut could ricochet through America’s trillion-dollar grocery industry. Amazon owns Whole Foods, but that business revolves around higherpriced natural and organic groceries. Now as its rivals amp up their own grocery delivery and pickup services, experts say Amazon could be forging a path to lock into another part of customers’ shopping habits — and convert those people to Prime members along the way.

The Wall Street Journal reported last week that Amazon plans to open its first grocery store in Los Angeles, possibly by year’s end. The Journal reported that Amazon had signed leases for at least two other grocery locations that could open early next year. Sources told The Journal the company was looking into locations in San Francisco, Seattle, Chicago, Philadelphia and Washington, D.C.

Amazon is also reportedly looking to buy regional grocery chains, according to The Journal. Amazon declined to comment.

Amazon planted a flag in the grocery sector in 2017 when it bought Whole Foods for $13.7 billion. The deal gave the retail giant a foothold in brick-andmortar stores nationwide, and expanded options for the company’s pickup and delivery programs. Amazon sells its Echo and other devices in Whole Foods stores, and Prime members can access discounts on some groceries and delivery services.

The merger also handed Amazon troves of data on grocery sales. Much of Amazon’s consumer data stems from what people shop for online, but in a physical store like Whole Foods, that data includes the choices shoppers make in person.

The Journal reported the new Amazon grocery stores wouldn’t compete directly with Whole Foods stores, and that they would sell a wider selection of products.

Analysts have had their eyes on Amazon’s grocery game. In a December report, analysts at Cowen said they expected Amazon’s grocery presence to boom over the next few years. Analysts wrote that as shoppers buy more food and beverages online, and as Amazon expands its brick-and-mortar footprint, the company could pass Kroger and secure the No. 2 spot in national grocery sales, behind Walmart.

Amazon laid a foundation for its grocery strategy through Prime, Amazon Go stores and other grocery pick-up options. Then it bought Whole Foods and rose from 17th place in the U.S. food and beverage grocery market to sixth, according to Cowen. Amazon’s next act: a dual push in online grocery plus a wider brick-and-mortar fleet, Cowen’s analysts wrote at the time.